The Basics of Bankruptcy
Is your family struggling with finance? Does your telephone ring constantly with threatening calls from collection agencies? Do you receive past-due notices for credit card bills in the mail everyday? Are you afraid of having your utilities shut off, or even of losing your home? If you answered yes to these questions, then you may already be considering filing bankruptcy. Whether you have already thought about doing so, or you are simply looking for a way out of the constant struggle with finance, this article will be helpful to you. Below, we discuss the basics of filing for bankruptcy.
What is Bankruptcy?
Bankruptcy is a legal proceeding. When an individual, a married couple, or a business is entirely unable to pay outstanding debts, oftentimes filing a petition for bankruptcy is the course of action taken. Herein, we will focus solely on individuals and couples filing for bankruptcy.
Bankruptcy is an opportunity for a debtor or debtors to start over with regard to finance. After the initial petition is filed, anyone or any company you owe money to is given notice that they may not pursue further collection efforts against you at this time. The creditor may file their own paperwork with the bankruptcy court in your case, either objecting to your petition, or stating their claim to any future payment plan that you may be required to partake in.
What is the First Step in Bankruptcy?
While you do not have to hire an attorney to represent you in a bankruptcy matter if you are an individual or a married couple, it is often wise to do so. With regard to finance, bankruptcy laws, and other pertinent matters–an attorney skilled in this line of work will be able to best advise you. He or she will also be sure the correct paperwork is filed, and will manage deadlines in your court matter to be sure your debt is relieved legally and efficiently. So, before you go any further, first you should consult with a bankruptcy attorney.
Chapter 7 Bankruptcy
This is the most commonly filed for type of bankruptcy in the United States. For people who do not have many assets, this is often the correct choice. In a Chapter 7 Bankruptcy, any unsecured debt you have (such as personal loans and credit card debt) will be erased. Best of all, under the laws of exemption, you will be able to hold onto most, if not all, of your personal property.
Chapter 13 Bankruptcy
Chapter 13 Bankruptcy is for people who still have a reliable source of income, but who have fallen behind on payments. In this type of bankruptcy, you develop a plan for repaying debts you owe. This plan should be anywhere from three to five years in length. Chapter 13 is often the best choice for individuals or couples whose home is in foreclosure, as it can stop the foreclosure proceedings. This means that you may not lose your home; you may be allowed to catch up your mortgage payments so you can keep your house.
Post-Bankruptcy
Sometimes a bankruptcy is necessary in cases of severe debt to income ratio. If you do decide to file a petition, the resulting bankruptcy will reflect on your credit history for anywhere from seven to ten years after. This means that you may have difficulty getting new lines of credit. You may be unable to finance a car loan, or get a credit card for a while. But eventually you will be able to get back on track regarding finance, and you will no longer have those debts hanging over your head.
Only you can decide if bankruptcy is right for you. If you are considering it, you should gather up all of your information as it relates to finance, debt, and assets, then schedule an appointment for a consultation with an attorney skilled in this area.
Author Bio
Joshua Turner is a writer who creates informative articles in relation to business. In this article, he describes the basics of bankruptcy and aims to encourage further study with a GW Degree in Paralegal.
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Category: Bankruptcy
